When a business entity in India receives Foreign Direct Investment (FDI) and issues shares to a foreign investor, it must adhere to the RBI's FDI filing requirements.
This involves submitting the Form FCGPR through the online Foreign Investment Reporting and Management System (FIRMS) portal.
tax zenith can assist you in efficiently navigating the FDI filing with the RBI.
Our expertise ensures that your business complies seamlessly with all regulatory requirements. Reach out to us today for professional support in managing your FDI Filings.

FDI filing with RBI

Foreign Direct Investment (FDI) filing refers to reporting the inflow of foreign investment in an Indian company to the the Reserve Bank of India (RBI). This reporting is mandatory for Indian companies that receive foreign investments in equity shares, compulsorily convertible preference shares or debentures, and warrants or partly-paid shares. The reporting process involves submitting the Foreign Currency and General Permission Route (FCGPR) form and a Company Secretary (CS) certificate.

Purpose of FDI Reporting with RBI

FDI reporting with RBI aims to ensure compliance with the FDI policy and provide a transparent and efficient regulatory framework for foreign investments in India. This helps the government and the RBI to monitor and regulate foreign investments in the country and to make sure that they comply with the FDI policy and regulations.

Applicable Regulation on FDI filing with RBI

* The regulations applicable to Foreign Direct Investment (FDI) filing with the Reserve Bank of India (RBI) are primarily governed by the Foreign Exchange Management Act, 1999 (FEMA) and its regulations.

Conditions Required for Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI) involves a foreign company or individual investing in an Indian company. To ensure legal compliance, the investment must adhere to the FDI policy outlined by the Indian government. Additionally, the securities issued must be regulated under the Foreign Exchange Management Act (FEMA). FDI is permitted fewer than two routes in various sectors: Automatic Route: Under this route, non-resident or Indian companies can invest in a company without prior approval from RBI or the Government of India. Government Route: Under this route, prior approval from the Government of India is required before investing in a company.

FCGPR Form for FDI Filing

To ensure that foreign investments are in compliance with the FDI policy and regulations, the Reserve Bank of India (RBI) has mandated that all FDI inflows in India must be reported to the RBI through the Foreign Currency and General Permission Route (FCGPR) form. The FCGPR form is used to report the receipt of foreign investments in the form of equity shares, warrants, or partly-paid shares and compulsorily convertible preference shares or debentures. The FCGPR form must be filed electronically on the RBI's online reporting portal (FIRMS) within 30 days of the receipt of the FDI. The FIRM's portal can be accessed through the RBI's website, and businesses are required to create an Entity Master and register themselves on the portal before filing the FCGPR form electronically.

When Is the FC-GPR Form Required To Be Filed?

The FC-GPR form needs to be filed in the following situations:

Due Date for Filing Form FCGPR

Form FCGPR must be filed within 30 days of the allotment of shares, Compulsorily Convertible Preference Shares (CCPS), or Compulsorily Convertible Debentures (CCD).

Documents Required

The following documents are required for filing the FCGPR form:

Copy of KYC report of the remitter
Declaration by an authorized representative of the Indian Company
CS Certificate stating that all requirements have been complied with SMF- user manual
A valuation report by a chartered accountant/merchant banker indicates the manner in which the price of the capital instruments issued to a person outside India is arrived at.
Copy of FIPB approval (if required)
Letter of Debit Authorization
Declaration for conversion of CCPS
Pricing guidelines declaration
Board Resolution for the allotment of securities along with the List of Allottees
Reason for any delay in submission, if required
Any other documents that may be asked for by RBI or AD Bank.
Once all the required documents are received, the FCGPR form can be filed.

Penalty for Non-Filing of Form FCGPR with RBI

Penalty for Non-Filing of Form FCGPR with RBI
If a company fails to file the FCGPR form within the prescribed timeline, it will face penalties.
The penalty for delayed reporting is 1% of the total investment amount, with a minimum of INR 5,000 and a maximum of INR 5 lakhs per month or part thereof for the first six months of delay.
After six months, the penalty rate doubles to 2% per month until the non-compliance is rectified.
The penalty must be paid online into a designated account with the RBI. Therefore, it is crucial for companies to file the FCGPR form within the stipulated time to avoid any penalties.

Process for Filing FCGPR

Filing Foreign Direct Investment (FDI) with the Reserve Bank of India (RBI) using Form FCGPR involves several steps.

1.Obtain Authorized Dealer (AD) Code

The first step is to obtain an Authorized Dealer (AD) Code from a bank authorised by the RBI. The AD bank acts as an intermediary between the company and the RBI and verifies the information provided in the FCGPR form.

2.Registration of Entity User on Firms Portal

The Indian company must register as an Entity User on the RBI's online reporting portal (Firms Portal). The company must provide its details and obtain a User ID and Password.

3.Creation of Entity Master

Once registered on the Firms Portal, the company must create an Entity Master by providing details such as name, address, PAN, TAN, and other relevant information.

4.Registration for Business Users on Firms Portal

After creating the Entity Master, the company must register the Business Users authorised to access the Firms Portal and submit the FCGPR form. The Business Users must provide their details and obtain a User ID and Password.

5.Preparation of Form FCGPR

After obtaining the AD Code, the company must prepare the FCGPR form in the required format. The form can be accessed on the RBI's online reporting portal.

6.Provide Relevant Information

The company must provide relevant information in the FCGPR form, including the details of the foreign investor, the amount and type of investment, and the percentage of equity held by the foreign investor. The company must also provide information on the sector where the investment is made and any other relevant details per the guidelines.

7.Signing and Certification

The FCGPR form must be signed and certified by the company's authorized signatory and the AD bank's authorized signatory. The certification must confirm the accuracy and completeness of the form's information.

8.Reporting of FDI Received

The Indian company must report the receipt of FDI within 30 days of receipt using Form FC-GPR on the Firms Portal. The FCGPR form must be duly filled, signed, and certified by the company's and AD bank's authorised signatory. The company must also upload the required documents, such as the Foreign Inward Remittance Certificate (FIRC) and the KYC documents of the foreign investor.

9.Submission of Form

Once the FCGPR form is duly completed and certified, it must be submitted to the AD bank electronically on the RBI's online reporting portal within 30 days of receiving the FDI.

10.Acknowledgement Receipt

After submission of the FCGPR form, the Firms Portal generates an acknowledgment receipt. The company must download and save the acknowledgement receipt for future reference.

11.Follow-up

The Company must follow up with the AD bank to ensure that the RBI has accepted the FCGPR form. The company must promptly address any discrepancies or clarifications if the RBI seeks any differences or clarifications.

Simplify Your FDI Filing with tax zenith

Choose tax zenith for your FDI filing with the RBI to ensure a smooth and hassle-free process. Our team of experts provides comprehensive support,
from document preparation to timely submission, ensuring full compliance with RBI regulations. With our in-depth knowledge and experience, we help you navigate the complexities of FDI filings,
saving you time and preventing costly penalties.